What Happens to Your 403(b) If You Leave Your Employer

Assets may be transferred to your new employer's plan if permitted by that plan.

Assets may be moved to a rollover IRA at an institution of your choice. This will permit the money to continue to grow tax-deferred.

You may leave the money in your current plan and continue to enjoy tax-deferred growth. If plan has less than $5,000 in assets you may be required to transfer assets. Check with your employer for details.

You can take a lump sum distribution, but early withdrawal penalties and tax consequences may apply (unless age 59½ or 55+ and retiring) See: Accessing 403(b) Savings for details.

What Happens to Your 403(b) If You Become Disabled

You may be eligible for a distribution. This option is designated by each vendor and not by the plan. Contact your vendor for more information.

What Happens to Your 403(b) in the Event of a Divorce

Some or all of the balance in your 403(b) account may be transferred. Distribution to an alternate payee will be permitted if it is made pursuant to a qualified domestic relations order (QDRO). This is a decree, judgment, or order that meets the qualification requirements of the Internal Revenue Code. Those requirements include the following:

The order must have been issued under a state's community property or other domestic relations law.

It must relate to the provision of alimony, child support, or the property rights of a spouse, former spouse, child, or other dependent (alternate payee).

It must assign to the alternate payee the right to receive all or a portion of the participant's plan benefits.

It must clearly specify (1) the names and addresses of each alternate payee, (2) the amount or percentage of the participant's benefit to be paid to each alternate payee, (3) the period of time over which the order applies, and (4) each plan to which the order applies.

When discussing property distribution in contemplation of a divorce, you should make certain that your attorney ensures that the distribution of your 403(b) assets and all other retirement plan assets meet the requirements of a QDRO.

What Happens to Your 403(b) in the Event of Death

Death benefits are paid to a beneficiary or beneficiaries on file with your vendor. How the proceeds are distributed depends upon the age of the participant upon death and beneficiary's relationship to you. You should review your beneficiary designations annually and update them as necessary through your 403(b) vendor.